Specialty Coverages
Limitations Endorsements
if a policyholder initially declines certified acts of terrorism coverage, the insurer may offer more limited terrorism coverage amounts in return for a reduced premium. An insurer may accomplish this by writing the coverage for a sublimit that is lower than the limit applicable to other exposures
Insuring Foreign Operations
standard policies leave insureds with foreign policies exposed to potentially serious coverage gaps. Organizations that operate outside the coverage territory, as defined in standard commercial policies, need insurance for their foreign exposures To meet the needs of organizations with foreign loss exposures , a number of insurers offer a variety of specialized coverages, including these: -foreign property and business income insurance -foreign liability insurance -foreign supplemental and excess auto insurance -foreign voluntary workers compensation and employers liability insurance -foreign crime, including kidnap and ransom insurance -political risk insurance to provide protection against seizure of assets, currency incovertibility, and interference with contractual performance these coverages are similar to their domestic counterparts, although some are unique to foreign situations
Aircraft medical payments coverage
pays, regardless of the insured's legal liability, for reasonable medical or funeral expenses incurred by occupants of the insured aircraft
Other aircraft coverages
aircraft liability insurance is often supplemented by medical payments coverage, passenger voluntary settlement coverage, and nonowned aircraft liability coverage the first two coverages provide a way to make prompt payments to injured persons and perhaps avoid more costly liability claims
Aircraft Hull Coverage
"hull" is widely used to refer to physical damage coverage for aircraft. The two most common aircraft hull coverages are "all risks--ground and flight" and "all risks--not in motion" subject to only a few exclusions. The exclusion of claims caused by war, strikes, riots, and similar perils noted in conneciton with aircraft liability also applies to aircraft hull coverage
Insurance Agents and Brokers E&O Liability Policies
A typical insurance agents and brokers E&O policy agrees to "pay on behalf of the insured damages that the insured becomes legally obligated to pay because of claims made against the insured for wrongful act arising out of the performance of professional services for others
Self-Insured Retention (SIR)
An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy
Employee Retirement Income Security Act (ERISA)
ERISA imposes specific duties on all employee benefits plan "fiduciaries." ERISA defines a fiduciary as practically anyone whose role in employee benefits involves discretionary control or judgment in the design, administration, funding, or management of a benefit plan those who meet the ERISA definition of a fiduciary can be held personally liable for the full amount of any loss resulting from a breach of their statutory duties. the employer of the fiduciary can be held liable for the loss
Environmental Insurance
Environmental Insurance policies are not standardized, and competing policy forms commonly have significant coverage differences. different policy forms can be substantially modified by endorsement or combined to provide packages of different types of environmental insurance that share a common policy limit There are many different types of environmental insurance policies. Five of the more common types include these: -Site-specific environment impairment liability -underground storage tank compliance -remediation stop-loss -contractors pollution liability -environmental professional errors and omissions (E&O) liability
Coverage C/Enitity Coverage
In addition, most D&O insurers now include an insuring agreement, often called Coverage C, for entity coverage, which covers claims made directly against a corporation (the entity) for wrongful acts... entity coverage can be a worthwhile extension of the D&O policy. However, entity coverage presents disadvantages for directors and officers because it requires them to share the limits of insurance with the corporation
Aggregate Limits
In some cases, the aggregate limit applies to all claims under the umbrella; in other cases, the aggregate limit applies only to coverages that are subject to an aggregate in the underlying policies
Terrorism Endorsements for Commerical Property and Liability Forms
Insurance advisory organizations have developed various endorsements to help insurers provide coverage for terrorism-related losses in accordance with federal law the federal government shares the financial responsibility for terrorism losses with the insurance industry (through federal reinsurance) to help insurers comply with TRIA, ISO has developed multiple versions of specific types of terrorism endorsement to complement various commerical coverage forms
Professional Liability Insurance
Insurance that covers persons engaged in various occupations against liability resulting from their rendering or failing to render professional services
Miscellaneous Bonds
Miscellaneous bonds are those that do not fit under other surety bonds categories. These bonds often support private relationships and unique business needs
Maintanence Bond
a contract bond guaranteeing that the work will be free from defects in materials and workmanship for a specified period after the project is completed
Cap Endorsements
TRIA = places a $100 billion program cap on annual aggregate insured losses paid by the federal government and all insurers for certified acts of terrorism This endorsement clearly describes certified acts of terrorism as defined in TRIA and informs the policyholder that the insurer's responsibility to pay losses for certified acts of terrorism will end if the program cap is reached
Auto Coverage Endorsements
TRIA does not apply to auto insurance, regardless of whether coverage is provided in a primary auto liability coverage form
NBCR Exclusion Endorsement
TRIA does not mandate coverage for losses from terrorist attacks that use nuclear, biological, chemical, or radiological material when such coverage is not provided in the base policy
Consent to Settle
The CGL policy provides that the insurer may, at its discretion, settle any claim or suit. More typically, the professional liability and management liability policies provide that if the insured does not agree to a proposed settlement, the insured must take over the defense and pay any further defense expenses as well as the amount of any judgment or settlement that exceeds the amount for which the insurer could have settled the claim--- which is known as a"hammer clause"
Management Liability Policies
Three main types of management liability insurance are directors and officers liability, employment practices liability, and fiduciary liability
Umbrella Exclusions
When an umbrella policy provides broadened coverage, it is typically achieved by using exclusions in the umbrella policy that have narrower application than the exclusions in the underlying policies another possibilty is that the umbrella policy contains an exclusion that does not exist in any of the underlying policies and may provide narrower coverage than the underlying insurance for the particular exposure
Disclosure Endorsement
When insurers extend an offer to purchase insurance or to renew a policy, and at the time of purchase, TRIA requires them to inform policyholders about the cost and limitations of terrorism coverage through these three required disclosures: -the portion of the policy premium that is attributed to certified acts of terrorism--Additionally, insurers must list (in an endorsement or in the policy declarations) the coverages to which that premium applies -the federal share of compensation for certified acts of terrorism under the program--After the insurer's deductible is met, the federal share is 85% of losses attributed to certified acts up to the program cap -the amount of the program cap ($100 billion)--this disclosure must explain that if the program cap is exceeded, the amount of coverage for certified losses may be reduced at the discretion of the Secretary of the Treasury
Workers Compensation Endorsement
Workers comp insurance is subject to TRIA. Therefore, insurers must include coverage for certified acts of terrorism in any workers comp policies they write. Moreover, state workers comp statutes prohibit insurers from excluding or limiting coverage for acts of terrorism (whether certified or not). Therefore, few terrorism-related endorsements are needed for workers comp policies
Court Bonds
a classification of surety bonds guaranteeing that a person or an organization will faithfully perform certain duties prescribed by law or by a court or will demonstrate financial responsibility for the benefit of another until the final outcome of a court's decision
Public Official Bonds
a commerical surety bond guaranteeing that a public official will perform his or her duties faithfully and honestly
Bid Bond
a contract bond guaranteeing that a contractor bidding on a construction or supply contract will enter into the contract and will provide a performance bond if the bid is accepted
Performance Bond
a contract bond guaranteeing that a contractor's work will be completed according to plans and specifications
Payment Bond
a contract bond guaranteeing that the project will be free of liens
Remediation stop-loss policies
aka cost cap policies. an insurance policy purchased to insure remediation costs that exceed the projected or anticipated costs of performing an environmental cleanup of a specific location that is being sold
Passenger Voluntary Settlement Coverage
also know as admitted liability coverage, is unique to aircraft insurance and is normally available for industrial aid aircraft. The coverage provides scheduled benefits if a passenger suffers death, dismemberment, or loss of sight
Extended Reporting
an additional period (also called a "tail") following the expiration of a claims-made policy, during which the expired policy will cover claims first made for injury or damage that occured on or after the policy's retroactive date (if any) and before policy expiration some claims-made professional and management liability policies have a built-in ERP that applies automatically, for no additional premium... usually lasts 30-60 days
Commercial Excess Liability Insurance
an excess liability policy may take any of the following three basic forms: 1. A "following form" subject to the same terms as the underlying policy 2. A self-contained policy subject to its own terms only 3. A combination of the first two types
Contractors Pollution Liability (CPL) policies
an insurance policy that covers the pollution related loss exposures of a contractor CPL policies are available with either a claims-made or an occurrence coverage trigger CPL policies often exclude these exposures: -asbestos abatement operations -radioactive matter -claims arising out of the insured's products -damage to sites owned by or leased to the insured -professional liability
Site-Specific Environmental Impairment Liability Policies
an insurance policy that covers third-party claims arising from either sudden or gradual releases of pollutants from specific locations
Underground Storage Tank Compliance Policies
an insurance policy that provides proof of financial responsibility under governmental regulations that apply to the owners and operators of underground storage tanks containing fuels or other hazardous materials
Self--contained excess policy
applies to a loss that exceeds the underlying limits only if the loss is also covered under the terms of the excess policy
Aggregate Limit Endorsement
available for use with certain commerical liability coverage forms. These endorsements limit the insurer's exposure and provide limited liability coverage for certified acts for a reduced premium. The insurer may offer the aggregate limit endorsement only when the insured initially rejects certified acts of terrorism coverage
Professional Liability Policies
because the liability exposures of one profession may differ considerably from the liability exposures of another profession, insurers use different policies to insure each
Environmental Professional E&O Liability Policies
contain insuring agreements that resemble the coverage grants of traditional engineers professional liability policies and do not contain pollution exclusions written on a claims-made basis, usually subject to a retroactice date and a substantial deductible these policies differ by insurer. the insured-versus-insured exlusion eliminates coverage for claims in which one insured sues another insured for damages arising out of a professional error, act, or omission
Umbrella Insuring Agreement
contains one comprehensize insuring agreement instead of several specific ones. A common approach is for the insurer to promise to pay the amount in excess of the underlying limit that the insured becomes legally obligated to pay as damges for bodily injury, property damage, personal injury, or advertising injury arising out of an occurrence to which the policy applies, subject to the umbrella policy's limit. Other umbrella policies use two insuring agreements, often referred to as "A" and "B". In effect, these policies combine an excess policy and an umbrella policy in one policy. Insuring agreement A is an excess coverage applying over the underlying policies. Insurng agreement B applies to occurrences for which coverage is available under the umbrella but not in the underlying policies
Following-form excess policy
covers a liability loss that exceeds the underlying limits only if the loss is covered by the underlying insurance
Excess Liability Policy
covers liability claims in excess of the limits of an underlying policy or a state retention amount
All risks--not in motion
covers the insured plane only when it is on the ground and not moving under its own power. Thus, coverage applies when the plane is being towed, because it is not moving under its own power. Coverage does not apply, however, while the plan is taxiing, because the plane is moving under its own power
Cyber Crime Insuring Agreement
covers theft of money and securities and, depending on the insurer's form, intangible property (property that has no physical form). Cyber crime losses typically result from computer attacks or computer fraud
Terrorism Coverage
cyber risk policies, like most other commercial insurance policies, are subject to the Terrorism Risk Insurance Act (TRIA) of 2002, as amended in 2005 and 2007. Therefore, an insurer writing cyber risk coverage must include coverage against "certified acts of terrorism" as defined in TRIA, unless the insured declines the coverage. TRIA does not prohibit the insurer from excluding terrorism acts other than "certified acts of terrorism"
Nonowned Aircraft Liability Coverage
designed for firms that have employees or other agents who use airplanes in the firm's business... the coverage is available on a stand-alone basis for firms that have no other aircraft exposure. It is also purchased as part of an aircraft liability policy to provide coverage for substitute or rented aircraft
Required Underlying Coverages
each insurer writing umbrella liability policies has its own requirements for the types and amounts of underlying insurance that the insured must have
Certified Acts Exclusion Endorsement
exclude coverage for certified acts of terrorism when the insured has declined the insurer's offer of TRIA coverage. These endorsements may be attached for each line of business and coverage to which TRIA applies
Punitive Damages Exclusion Endorsement
exclude coverage for punitive damages awarded against a policyholder that arise directly or indirectly out of certified acts of terrorism as defined by TRIA
Umbrella Conditions
if the underlying insurance is not maintained, the umbrella policy will apply as though the underlying insurance had been maintained. That is, a claim that would have been covered by an underlying policy, had it been kept in force, will only be covered for the amount that exceeds the limit of the underlying policy. The umbrella policy will not drop down to pay claims that would have been covered by the required underlying policy
Directors and Officers Liability Policies
insurance that covers a corporations directors and officers against liability for their wrongful acts covered by the policy and also covers the sums that the insured corporation is required or permitted by law to pay to the directors and officers indemnifications Traditionally, D&O policies contain these two insuring agreements: -Coverage A- covers the directors and officers of the insured corporation for their personal liability as directors or officers that results from "wrongful acts". Wrongful act is typically defined to include any breach of duty, neglect, error, misstatement, misleading statement, omission, or other act done or wrongly attemped by the directors or officers -Coverage B- Often referred to as company reimbursement coverage, it covers the sums that the insured corporation is required or permitted by law to pay to the directors and officers as indemnification for suits alleging wrongful acts by directors or officers
Employee benefits liability insurance
insurance that covers an employer against liabiliy claims alleging improper advice or other errors or omissions committed while administering the employer's employee benefit plans
Employment Practices Liability Policies
insurance that covers an organization, its directors and officers, and its employees against claims alleging damages because of wrongful employment practices such as sexual harassment, wrongful termination, and unlawful discrimination
Aircraft Insurance
insurance that covers liability due to the insured's ownership, maintenance, or use of aircraft; physical damage to aircraft owned or used by the insured; and other aircraft loss exposures aircraft insurance is a specialized form of coverage with no standard policy... aircraft insurance in some ways resembles auto insurance in that its policies are divided into liability and physical damage sections pilots of insured aircraft must meet strict qualifications, they must hold the appropriate license and current medical certification from the Federal Aviation Administration (FAA) and are often required to have at least a specified number of flight experience An aircraft policy can include aircraft liability coverage, aircraft hull (physical damage) coverage, and other aircraft coverages. Other aircraft coverage can include medical payments coverage, passenger voluntary settlement coverage, and nonowned aircraft liability coverage
Management Liability Insurance
insurance that covers organizations and in some cases their directors, officers, and other employees agaisnt liability claims for damages resulting from various wrongful acts that are not covered under other commercial liability policies; common examples are directors and officers liability insurance, employment practices liability insurance, employee benefits liability insurance, and fiduciary liability insurance
Fiduciary Liability Insurance
insurance that covers the fiduciaries of an employee benefit plan against liability claims alleging breach of their fiduciary duties involving discretionary judgment
Claims-Made Trigger
most professional liability policies have a claims-made coverage trigger instead of an occurrence coverage trigger . The reason being that professional and management liability claims are sometimes not settled until long after the policy has expired. With a claims-made policy, the policy in effect when the claim is first made against the insured is the policy that covers the claim
Cyber Risk Insurance
offer a variety of cyber risk insurane policies that can be customized to meet an organization's specific cyber risk loss exposure insurers typically offer policies containing first-party-only coverage (property and theft), third-party-only coverage (liability), or both in combination policy format
Contract Bonds
often required of an individual or organization (the principal) that is contractually obligated to perform work or a service for another individual or organization (the obligee). They serve two broad purposes: -the surety's willingness to furnish the bond is evidence that, in the surety's judgment, the principal is qualified to fulfill the terms of the contract -the suretly guarantee that, even if the principal defaults, the obligations of the contract will be performed, or the surety will indemnify the obligee Contract bonds fall into several categories, each with unique characteristics: -bid bond; performance bond; payment bond; maintenance bond
Deductibles
professional liability and management liability policies are usually subject to a deductible. most insurers have mandatory minimum deductibles for their various classes of professional liability and management liability policies
Duty to Defend and Selection of Defense Counsel
professional liability and management liability policies can provide defense coverage in the same manner as the CGL policy, in which the insurer has the duty to defend the insured against claims that fall within the scope of the policy's coverage. The insurer selects and pays the attorneys that defend the insured. further difference is that the cost of defense under professional liability and management liability policies is often paid within (not in addition to) the limit of insurance
Professional and Management Liability Contrasted with CGL
professional liability and management liability policies differ from the CGL coverage form and other standard liability policies in these important ways: -claims-made trigger -consent to settle -duty to defend and selection of defense counsel -deductibles
Physicians Professional Liability Policies
professional liability usually arises from improper performance in the practice of the profession that reults in injury. Physicians can also be held reliable for administrative errors or omissions connected with their medical practices. The insuring agreement in a typical physicians professional liability policy covers damages for injury resulting from the rendering of or failing to render professional services by the insured or by anyone else for whose acts the insured is legally responsible. The insuring agreement also covers liability arising out of the insured's service on a formal accreditation board
Aircraft Liability Coverage
protects the insured against third-party claims for bodily injury and property damage resulting from the ownership, maintenance, or use of insured aircraft Aircraft liability coverage typically contains these exclusions: -intentional injury, except to prevent interference with safe operations -liability assumed under contract. However, some policies cover liability assumed under incidental contracts, such as a contract for use of an airport -bodily injury to an employee of the insured -obligations under workers compensation or similar laws -claims caused by war, strikes, riots, labor disturbances, terrorism, sabotage, hijacking, or unlawful seizures -damage to property owned, leased, occupied, controlled, or under the care of the insured. However, some policies provide basic limits of coverage for passengers' baggage or for damage to hangers leased by the insured -claims by one employee against another, referred to as the fellow-employee exclusion. The policies used by some insurer do not contain this exclusion, and others will remove it by endorsement when requested by the insured and agreed to by the underwriter
Drop Down Coverage
provided in many umbrella liability policies for (1) claims that are not covered by an underlying policy because the underlying policy's aggregate limits have been depleted and (2) claims for which the underlying policies do not provide any coverage, regardless of aggregate limits When a claim covered by the umbrella policy is not covered at all by any primary policy, the drop-down coverage is usually subject to a self-insured retention (SIR)
Intellectual Property Liability Insuring Agreement
provides an insured with coverage for any copyright, tradesecrets, trademark, or patent infringement (the unauthorizes use of an individual intellectual property) claims arising out of the use of the insured's protected ideas or work (or infringing on the protected ideas or works of another)
Electronic Data Protection
provides coverage for costs to recover or restore electronic data that have been altered, destroyed, deleted, or damaged
Cyber Extortion Insuring Agreement
provides coverage for expenses related to computer network kidnap and/or ransom events
Notification or Remediation Insuring Agreement
provides coverage for expenses related to crisis management during and after a cyber risk loss (typically related to a security breach. Coverage can include crisis manangement-related expenses such as costs to notify customers of a security breach and costs to develop and execute a public relations campaign to manage any negative publicity surrounding the breach and to maintain the insured's reputation
Technology Errors and Omissions Liability
provides coverage for liability arising from any negligent act, error, or omission relating to an insured's products or services provided to others... depending on the insuring agreement, the coverage can also apply to employees of the insured's independent contractors
Network Security Liability Insuring Agreement
provides coverage for liability arising from security breaches to an insured's computer network
Electronic Media Liability
provides coverage for liability arising from the insured's electronic content. The coverage can include email communication; Web site content; and message board or discussion forum content that results in actual or alleged acts defamation, disaragement, libel, slander, or false advertising. It can also be categorized by errors and omissions in the written or spoken word resulting in claims alleging financial loss or damage
Privacy Liability Insuring Agreement
provides coverage for liability arising from unauthorized disclosure or use of the private information of others or, depending on the insuring agreement, liability arising out of an insured's failure to comply with privacy provisions contained in laws such as the Health Insurance Portability and Accountability Act (HIPAA), the Gramm-Leach-Blilry Act (GLBA), or any anti-identity theft legistlation. Actions typically are generated by a network security breach or unauthorized access to or use of information
Business Interruption Insuring Agreement
provides coverage for loss of business income, loss of contingent business income, and payment of extra expenses incurred as a consequence of a business interruption or suspension of the insured's computer system (or dependent system) due to cyber risk loss ****Denial-of-service attack**** an attempt to overwhelm a computer system or network with excessive communications in order to deny users access
Umbrella Liability Policy
provides excess coverage over several primary policies and may also provide coverage not available in the underlying policies, subject to a self-insured retention
Professional Liability and Management Liability Insurance
similar in that they cover a variety of claims--often for large amounts of damages--that are usually not covered by more common coverages such as commercial general liability (CGL) or business auto liability
Types of Surety Bonds
surety bonds may be designed to comply not only with various contractual arrangements that arise between a principal and an obligee, but also with various legal and statutory requirements Becuase surety bonds are used to provide a wide range of guarantees, many types exist. They fall into these categories: -contract bonds -license and permit bonds -public official bonds -court bonds -miscellaneous bonds
Commercial Umbrella Liability Insurance
term "umbrella liability" is generally used to describe a type of excess insurance that is broader than ordinary excess liability policies. it almost always provides excess coverage over several primary policies, such as CGL, auto liability, and employers liability This policy can perform three functions: -it provides additinal limits above the each occurrence limits of the insured's primary policies and takes the place of the primary insurance when primary policies and takes the place of the primary insurance when primary aggregate limits are reduced or exhausted. In addition, it may cover some claims that are not covered by the insured's primary policies
All risks--ground and flight
the broader of the two, covers the insured plan whether it is in flight or on the ground at the time of loss
Retroactive Date
the date on or after which the injury, damage, or other insured event must occur in order to be covered in a claims-made liability policy
Other Acts Exclusion Endorsements
these endorsements allow insurers to exclude noncertified acts of terrorism occuring outside the US. These endorsements are available only for use with commercial liability coverages, because those coverages insure some exposures outside the jurisdictional boundries of TRIA (page 11.35)
License and Permit Bonds
they vary in what they guarantee. Some bonds guarantee compliance with laws that apply to the licensed activity; some additionally guarantee the payment of damages to anyone who suffers a loss resulting from noncompliance with those laws
Commercial Excess and Umbrella Liability Insurance
this is necessary because many insureds have liability loss exposures larger than the limits available under their commercial general liability, commercial auto, and other liability. two types of coverage organizations buy to extend the limits on their policies: 1. excess liability policy 2. umbrella liability policy